The new financial year has started from 1st April. From this date, major changes have been made in many financial rules. There has been a big change, especially in the insurance sector. One important change is the abolition of tax rebates on certain types of insurance premiums. Apart from this, major changes have been made in the limit of insurance-related expenses and commissions. It is important to be aware of these changes, especially if you plan to buy a new insurance plan in the current financial year.
Customers will have to lose more pocket
Starting this year, customers will have to pay higher tax if they invest in policies with higher premiums. Earlier, investors did not have to pay any tax on such policies. But now it is necessary for them to pay tax on the premium amount of five lakhs annually.
It is important to note that Unit Linked Insurance Plans (ULIPs) have been exempted from this new income tax rule. This has ensured that the benefits of tax exemption are available even on ULIP premiums above Rs 5 lakh per annum.
What Changed for Insurance Agents?
Insurance regulator IRDAI has changed the limit of management expenses and commission, which is applicable from today itself. IRDA has decided to remove the cap on commission on insurance agents or aggregators. Earlier, IRDA had proposed that the commission should be capped at 20 per cent of the total expenditure. But this limit has been removed. Now, insurance companies can decide the amount of commission as per their wish.
With these new changes in the insurance sector, it is important to stay abreast of the new rules and regulations. One should keep all the factors in mind while buying an insurance policy in this financial year. This becomes especially important with the abolition of tax rebates and changes in the cap on management expenses and commission. Earlier with the introduction of Bima Sugam, customers got a single platform for their insurance needs.
